Sanford Health executives Becky Nelson and Nate White are out to create a succession success story.

“We teased each other and said this will be the best transition of leadership that an organization has ever seen,” said Nelson, who recently announced plans to retire early next year as the health system’s senior vice president and chief operating officer. “Meaning ease, continuity, support of each other.”

Nelson and White, who has been named as her replacement, rarely step outside each other’s shadows.

“There’s no communication, no meeting, no debate that Nate and I aren’t in together,” Nelson said. “I don’t make a decision without Nate, and many times I say, ‘Nate this needs to be your decision. You’ll be living with it after I leave.’ ”

White, who started at Sanford as an attorney in 2006 and advanced to become chief operating officer of the health services division for the Sioux Falls region, said he’s humbled and grateful for the transition process.

“How much time can we spend together? Not enough. I’m really trying to learn everything I can,” he said. “It’s watching her, her leadership style, her knowledge base, her skill of making sure the right people are in the right room when the decision is made. There isn’t a day that goes by when there isn’t something I grasp onto and say, ‘I have to remember that.’ ”

White’s succession comes as businesses nationwide prepare to deal with what has been called a perfect workplace storm. A growing number of baby boomers who put off retiring with concerns over the economy are deciding it’s time to leave now.

A 2008 survey by Gallup Press found that 52 percent of business owners planned to leave their business by 2017.

While businesses recognize the coming wave of retirements, many haven’t started planning who will succeed top executives and how those future leaders should be developed, according to Kerri Tietgen, owner of KT Consulting Inc.

“I see a bit of a panic,” she said. “I had this conversation 10 years ago, and at the time they were panicked. Then it got put on the back burner as a result of the recession, and today companies are very concerned, very behind, and the catch-up can be overwhelming.”

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Best practices

Businesses that have fallen behind should prepare to be creative and expect new leaders will be learning on the job, Tietgen said.

“That is where people learn best. It’s not a bad thing,” she said. “But you can do that as a strategic plan, or you can do that out of necessity. I’ve found when there’s strategy behind it, it goes a lot better.”

“Our growth strategy is aggressive, and it’s not just doing more of the same,” President and CEO Dan Rykhus said. “It’s a very complicated growth strategy, and it requires leaders.”

Since its founding in 1956, the company has had only four CEOs, a fact Rykhus credits to succession planning. He found out in 2008 when he was elected to the board of directors that he was a strong candidate to succeed then-CEO Ron Moquist, though it didn’t become official until August 2010.

“Ron said, ‘Dan, you’re going to be CEO at 45 years old. And that’s young for a CEO. But it’s important that on Day One you and the board start succession planning for the (next) CEO,’ ” Rykhus said. “By doing that, you avoid it becoming personal.”

At Raven, the executive team members and five or six leaders in each division annually identify three potential successors for each position.

“The important thing that comes out of that is leadership-development plans,” Rykhus said. “If it’s just a depth chart, you’re not doing anything. If it’s used as a development planning tool, it has a lot of value.”

Those identified as potential leaders receive additional professional development and growth opportunities, he said.

The Sioux Falls office of Eide Bailly LLP also has developed best practices in succession planning focused on continuity of service for the accounting firm’s clients.

The firm asks partners to give one to three years’ notice of a retirement.

“The steps are put in place to transfer client responsibilities to others,” partner Keith Severson said. “So at the end of the three-year period … our clients don’t miss a beat.”

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The future retiree will spend the transition period helping build relationships between clients and their new accountants as well as training colleagues on the intricacies of each client’s tax or auditing needs.

Health care's approach

At Sanford Health, human resources identified that more than half of the organization’s leaders will turn 65 in the next 10 years.

“When we saw this coming at us a couple years ago, we … put in place formal leadership-development opportunities,” said Evan Burkett, chief human capital officer.

Employees who show leadership potential and new managers go through a program that Sanford developed around its organizational values and specific needs. Interviews with more than 400 people who were identified by Sanford executives as successful leaders helped shape the curriculum.

“It also provides individuals with more insight into where their strengths are, how they respond under stress and what their communication style is,” Burkett said.

Sanford asks its top leaders to give at least six months’ notice before retiring to allow for transitions like the one Nelson and White are making.

“We have several instances of that going on and at very high levels,” Burkett said. “Now that people are seeing it in action, there’s excitement about opportunities in the organization.”

At Avera Health, executives are restructuring human resources systemwide and improving technology to help track eligible retirees. There’s also a growing emphasis on succession planning and plans to take a successful Avera McKennan program systemwide.

Each year, key leaders will submit a list of subordinates and others in the organization who could step into their roles, along with timelines for successors’ readiness and development needs.

“By no means do we limit our searches to those people, but at least we have them on our radar,” McLean said. “And, hopefully, there will be a conversation with them to discover what they’re interested in.”

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The Avera McKennan region has developed nearly 80 classes focused on aspects of leadership development in an effort to give leaders “every tool possible,” he said.

“People are our most valuable resource,” he said. “The most important thing we do as leaders is make great hires. It all starts there.”

Public sector strategies

The Sioux Falls School District also has created a formal leadership-development program. Superintendent Pam Homan researched and developed it three years ago as a succession-planning model for the administrative team.

Participants in the Leadership Development Institute spend two or three years covering topics such as managing complex change, data-based decision-making, and developing talent. All new administrators attend as well as administrator interns identified through a competitive application process.

“The successful candidates in the Leadership Development Institute are those first considered to fill open positions,” Homan said. “The model has exceeded my expectations. Already in year two, three of the 13 participants have moved into administrative positions.”

Sioux Falls city government is developing a similar program. City officials estimate that 100 out of 1,100 employees are eligible to retire or will be in the next year.

“Not all of those are management,” said Kevin Smith, assistant city planning director. “But anytime you look at that kind of demographics and the potential shift and loss of knowledge, skills and expertise, any other business would be saying ‘How are we going to prepare for that?’ ”

Smith was one of 15 managers who participated in a 12-week pilot program that he called “a radical departure from how we have grown managers in the past.”

Developed in partnership with Avera McKennan’s leadership program, the city’s approach identifies potential leaders across its 12 departments and brings them together for professional development.

“We want to encourage people to learn about leadership, learn what their skills are and abilities for the future and educate them on management basics, ethics and conflict resolution,” human resources manager Reid Holsen said. “If we prepare people to better interact (among departments) and improve their skill set, succession will take care of itself.”

The hope is that people with potential are identified and encouraged early in their careers so they don’t get discouraged and leave for other opportunities, Smith said.

“And rather than waiting for someone to announce their retirement, posting the job opening, seeing who applies and hoping, we have someone coachable,” he said. “One of the goals is to get those individuals prepared.”